Botswana faces an array of problems.

One of the problems that developing countries face is a balancing act involving natural resources and the country's industry and service sectors. The dilemma comes down to being able to quickly develop and export commodities, as opposed to developing indigenous sources of manufactured goods that otherwise have to be imported.

Manufacturing requires support in terms of infrastructure to supply such elements as transport and warehousing. Institutional support is also needed, for example from a justice system that enforces agreements, and a tax structure that finances good governance. Developed human capital must be in place as well.

In recent years, Botswana has developed a reputation as one of the most progressive countries in sub-Sahara Africa. Its per capita income is the highest in the region, partly due to its small population and the high value of its commodity exports--with diamond mining accounting for approximately 75 percent of its exports.

Diamond production is likely to gradually decline in the medium term. But the country is developing other mineral resources, specifically nickel and copper, according to a July 31, 2007 report in The Voice (Francistown).

A dated CIA estimate (2003) of the portion of the population living below the poverty line is over 30 percent, but many observers say there is a developing consumer class. As this class grows larger, the pressure on inflation--already a major problem for the Bank of Botswana, the country's central bank--will increase because so much of the demand for consumer goods is met by imports.

The rate of...

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